Simplifying The Complex™
At TFRG we strive to simplify complex ideas into easily digestible concepts such that our clients can understand their options and make good financial decisions for themselves and their family.
We also tend to think of your assets and wealth a little differently than most other financial firms. We think about assets not solely based on what they are, but rather we equally consider what they are for. And no matter how complicated they are or how simple, no matter how large or how small… you can put your assets into one of three (3) buckets.
The first bucket is made up from the things that you use, touch and enjoy during your lifetime and the assets that generate your lifestyle. This is your “consumption” or your “lifestyle” bucket. It’s really important to overstuff this bucket because you’ve worked really hard your whole life and you should never want for something. It is also really important to actively manage the assets within this bucket to ensure that these assets deliver what they were intended to deliver. Once your first bucket is completely full, this doesn’t mean that this can’t be improved upon.
The second bucket is to take care of all of the things that can go wrong. This is the “contingency” or “risk” bucket. This bucket is “just-in-case” you get sick, just-in-case you need a new roof, and/or just-in-case something bad happens to you or the assets in your first bucket. And whether you are planning for this bucket along the way or not, you’ve still got it. If you are ignoring the risks that we all face, you are self-insuring and thereby potentially placing the assets in the other two buckets at risk. That’s OK, you just need to understand the potential consequences and make informed decisions for yourself. And once the second bucket is totally full, this doesn’t mean that it can’t be optimized.
Within either of these first two buckets, there are strategies that might help you improve or optimize what you are trying to accomplish. By doing the things that you can do to make it more efficient within each bucket, this will typically free up assets for other use. If there is one dollar left over, no matter what that asset is… by definition that is a “custodial” asset.
You may not have thought of it in this way before, but if the asset is not something you will use during your lifetime (for “consumption” or bucket 1), even in the worst case scenario (bucket 2); then these assets are really for someone or something else. These assets are those that are in your “custodial” or “legacy” bucket.
The trick is once you understand and have identified those specific assets that are in this third bucket, and who they’re for (it could be kids, grandkids and/or charity), and possibly even what form you’d like them to have it in; if you can then take that asset and reposition it, or move it around and call it something else so it’s worth more in the hands of whoever it’s meant for… that’s the essence of wealth transfer planning.
Comprehensive Wealth Management
If you think about it, the above described three (3) bucket concept is a simple explanation of what “comprehensive” wealth management is supposed to deliver. Specifically, you should have clarity on each of these buckets (and how you are filling them) as well as which strategies you are employing that are designed to improve, optimize and/or maximize your investments or assets placed into each of these buckets.
To borrow an analogy from the construction world… TFRG first acts as a financial “architect” and completes a comprehensive wealth management assessment in order to provide you with a written plan (or “blueprint”) outlining our observations about what could be improved, as well as our recommendations to address what was discovered. After the plan is agreed upon with the client and your assets have been assigned to the correct bucket, TFRG will then act as a “general contractor” by coordinating and overseeing the services of other experts and professionals such as the client's CPA, attorney, TPA, banker, etc. TFRG will also assist directly when it comes to implementing the insurance and investment needs of our clients.
Wealth Management SOS™
If you are presently unsure which of your assets are in each bucket, or if you do not have an up-to-date "blueprint" to follow, you may benefit from a “second opinion” on your wealth management. Chances are, that if you’re not sure what your assets are for (i.e. which bucket they’re in)… you’re probably also wondering if you’ve done everything possible you can to improve, optimize and/or maximize the assets that are allocated into each of these three (3) buckets.
Please schedule your complimentary Wealth Management SOS™ (“Second Opinion Service”) to learn more about how TFRG may be able to help you and your family reach your financial goals.